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One-time top-tier Indian IT services provider Satyam was rescued from collapse in 2009 following a massive internal fraud, but what is its recipe for once again being top billing?
In January 2009, then Satyam chairman B Ramalinga Raju admitted to misreporting the company's financial figures to the tune of $1bn. Now, after periods in life support, the company is back.
Satyam was once ranked among the giants in India. Its name was not out of place alongside Wipro, Infosys, TCS, Cognizant and HCL. In fact, this group and Satyam were together known as the Switch group.
Folding Satyam into Tech Mahindra
The former Satyam business is now part of Tech Mahindra, after the Indian network services specialist acquired Satyam and its IT services expertise.
Satyam is not just an add-on to the Tech Mahindra business – it accounts for a major chunk of its $3bn global sales and has doubled Tech Mahindra’s revenues.
Tech Mahindra had revenues of $1.2bn before the two businesses came together. In 2003, Tech Mahindra had revenues of $175m.
The company now employs 90,000 staff, 65,000 of whom are in India.
There might be no trace of the name, but the Satyam business will drive Tech Mahindra as telecoms and IT become inseparable in the digital world.
More on Satyam from crisis to growth
- Satyam chief B Ramalinga Raju admits to fixing the outsourcer's books
- New Satyam board must find cash, retain customers and hang onto staff
- State Farm Insurance dumps Satyam
- Mahindra Satyam boss says we're no Enron - exclusive interview
- Satyam message to stakeholders via YouTube following fraud scandal
- Satyam staff exodus as fraud unravels
- Video: Satyam senior executives outline plans
- Troubled Satyam needs cash
- Satyam emergency conference reveals recovery plans
- Mahindra Satyam recovery gathers pace with European expansion
Vikram Nair, head of Europe at Tech Mahindra, said the biggest landmark recently was the rebranding of the entire company as Tech Mahindra. The Satyam business was previously known as Mahindra Satyam.
“Internally we have always been one company, but externally we have been seen as two companies,” he said.
Combined expertise adds strength
The combined entity opens up more and larger deals for the company. Nair said the combination of Tech Mahindra’s telecoms legacy and Satyam’s enterprise software heritage is paying dividends.
“In the past, Tech Mahindra was focused on providing Telcos with billing and operating systems. But now, with the Satyam expertise, we can offer ERP [enterprise resource planning] and BI [business intelligence] software, for example,” said Nair.
“And in other sectors, rather than just focusing on software such as ERP and BI, we can sell billing and CRM systems. Big businesses are using telecoms to transform themselves.”
The company is now able to compete for large IT infrastructure deals. In the past, neither company was big enough to support large customers with full infrastructure deals, including network connectivity.
Another trend noted by Nair is the increased take-up of operations outsourcing. “We started with IT outsourcing, then there was business process outsourcing, and now operations outsourcing. Clients do not want to worry about technology. We want to take over systems from customers and offer it to other customers as a service,” he said.
Nair gave an example of how the company has taken over a reference data management system for a large investment bank and is now providing the bank with an outsourced service and offering it as a service to other investment banks. “We paid for the system and offer savings on operating costs.”
This is part of a larger trend that is seeing the industrialisation of services, according to Nair.
He also said the company is moving into networking managed services: “Currently, network services are being offered by telecoms manufacturers, but with IT and telecoms coming together we can target that market.”
He described this as a big market – up to three times bigger than the IT services sector.
In Europe, the company’s sales are about $800m. It is expanding rapidly, with 3,000 staff, most of which are service delivery staff.
It has opened delivery centres in Eindhoven, Hague, Brussels, Sweden, Cologne and Hamburg in the last 12 months. In the UK it already has centres in Basingstoke and Milton Keynes.
"The fastest growth is coming in continental Europe because that was lagging," said Nair.
Satyam is not just an add-on to the Tech Mahindra business – it accounts for a major chunk of its $3bn global sales and has doubled Tech Mahindra’s revenues
Tech Mahindra has local country managers across Europe. The company is also using experienced Europeans to support it in chasing large deals.
“We have a series of advisors helping us. This is important in big deals because these people influence deals,” said Nair.
Jean-Louis Bravard, director at Burnt-Oak Partners and former head of global head of financial services at EDS, is one such advisor. He thinks the company will be aiming to get in the top tier of Indian suppliers.
“It is currently top of tier two, but will be aiming for the bottom of the top group,” he said.
John Keppel, head of Northern Europe at ISG, said the Satyam story is "a dismal saga with a happy ending".
"Its business in the UK is going places. It is focusing on its strengths and will be aiming to get back into the top tier of Indian suppliers," he said.